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Lundin Petroleum: Q1 2016 financial update

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Oilfield Technology,

The profitability for the first quarter of 2016 will be impacted by certain expensed exploration costs as well as a net foreign currency exchange gain, mainly related to the revaluation of loan balances. These items will have no impact on the reported operating cash flow or EBITDA for the period.

Exploration costs

During the first quarter of 2016, Lundin Petroleum will incur pre-tax exploration costs of approximately US$71 million which will be charged to the income statement and offset by a tax credit of approximately US$42 million. The exploration costs mainly relate to the unsuccessful Lorry (PL700B) and Fosen (PL544) exploration wells in Norway and the Bambazon and Maligan exploration wells (Block SB307/308), offshore Sabah in Malaysia.

Foreign exchange

Lundin Petroleum will recognise a net foreign exchange gain of approximately US$159 million in its income statement for the first quarter of 2016. The Norwegian Krone and Euro strengthened against the US Dollar by approximately 5 percent during the first quarter of 2016 and the foreign exchange gain mainly relates to the revaluation of loan balances at the prevailing exchange rates at the end of the reporting period. The foreign exchange gain on the revaluation of loan balances was partly offset by settled foreign currency hedge losses in the first quarter of 2016 amounting to approximately US$18 million.

Adapted from a press release by Louise Mulhall

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